Access to Capital for Entrepreneurs: Does Location Matter?

Access to Capital for Entrepreneurs: Does Location Matter?

Finding investors for startups is one of the key necessities any entrepreneur faces. Upstate New York is a great place to start and grow a business, thanks to affordable real estate, a high quality of life, and top research universities – but what about access to capital? In this ongoing series, we’ll explore investment trends that affect startups in our region, and how changing strategies mean startups have better access, no matter their location.

How does geographic location impact the trajectory of a startup business?

Many entrepreneurs are under the impression that they need to locate their startups in large metropolitan areas to secure external sources of investment.

That’s not necessarily the case, says Brad Treat, Entrepreneur in Residence at Rev: Ithaca Startup Works and the Southern Tier Startup Alliance, and a mentor to dozens of startups throughout the region. Rather, Treat emphasizes the importance of locating a new business near a key resource, such as a university, which can provide human and intellectual capital, or physical infrastructure.

“If you look at Silicon Valley’s origins, you had a key resource, which was smart people coming out of top universities, particularly software computer people,” says Treat. “And then you had Hewlett-Packard and all these other computer companies that were there making the chips.”

For many retail businesses, it is critical, of course, to be in close proximity to their customer base.

“The analogy I always use is, if you’re going to open a dry cleaner, you would probably put it near where business people commute or live, so it’s convenient for them,” says Treat. “You wouldn’t put it next to a bank because they lent you the money.”

However, for other types of business, several factors have combined over the last few decades to minimize the importance of locating a startup close to its customers. First, the revolution in communications technology, which has made it easier to connect with customers from far away. For this reason, Treat recommends that entrepreneurs purchase high-quality cameras and speaker phones—or link-up with an incubator, like Rev: Ithaca Startup Works, which can offer those services—in order to make the most of meetings conducted long-distance.

“Those little things can make a big difference in the quality of a meeting,” he says.

Another factor is the proliferation of trade shows in recent years, which has allowed entrepreneurs to efficiently interface with prospective customers, by scheduling multiple meeting in the same location, in a context in which the customers are amenable to being pitched.

Samantha Abrams of Emmy’s Organics frequently speaks about her startup journey at Rev.

For a local example, Treat points to Emmy’s Organics, an Ithaca-based manufacturer of gluten-free, organic, vegan and non-GMO snacks, whom he has advised. The company began in 2009, selling their products at the Ithaca Farmer’s Market and GreenStar Co-op. A few years ago, the founders met a representative from Starbucks at a trade show, and, after staying in touch, were able to secure a deal this spring to supply to the coffee-chain’s North American stores.

A third factor is that companies are selling to a global customer base, so there is no longer an ideal spot for most startups to be situated.

“I came out of the auto industry,” says Treat. “It used to be that if you wanted to sell to the auto industry you had your operations in Michigan. Now where’s the auto industry? Everywhere.”

Treats again highlights Emmy’s Organics as a local company that is selling its products far outside of the immediate region.

“Across the street from GreenStar is a non-descript building —most people drive by and don’t know it’s a multi-million-dollar cookie factory that ships globally from downtown Ithaca to seventy-five hundred Starbucks, multiple regions of Whole Foods Market, and every Sprouts and Hannaford location,” says Treat.

When investing in startups, most Venture Capitalists (VC’s) work within a specific vertical in which they have expertise, rather than a geographic location. The most important factor to many VC’s in deciding whether to invest in a startup is the management talent of emerging entrepreneurs.

One way for startups to connect with investors is through office hours at regional incubators.

“They’ll invest in a great team,” advises Treat. “Then, they’ll look at the issue of competitive advantage, and whether there is a large and growing market.”

Ultimately, to grow a company, it’s most important to be in-tune with the marketplace, not the sources of capital. Investors, he notes, will sometimes offer suggestions based on their own preferences — which don’t always overlap with those of the company’s clientele.

Even when investors are located nearby, interactions with them are often conducted electronically.

“I had a local investor once whose offices were so close to mine, I could look out my window and see them,” recalls Treat. “I rarely met them personally. I primarily interacted with them by email. Most of the time when I had to have a document signed and returned to them, they wanted me to scan it and send it over electronically, when I could just as easily have walked it over.”

This can benefit entrepreneurs; an advantage to electronic communications is that it’s easy to maintain a record of correspondence.

“That can come in handy if someone says, ‘Hey, you never sent me that document,’ or ‘When did you sign that thing?’ or so on,” he points out. “That’s why, even for an investor who’s literally line of sight for me, I was scanning and emailing documents.”

According to Treat’s record of investment in the Southern Tier of New York state since the 2008-09 recession, local startups have received funding from more than 75 investors located throughout the United States and internationally. The list includes major domestic hubs of capital, such as the Bay Area, Los Angeles, New York, Boston, and Houston, as well as foreign countries as diverse as Ireland, Saudi Arabia, Canada, Russia, and Switzerland.

So, what are the key resources available to startups in Ithaca, NY and the Southern Tier region of New York state? Stay tuned for more, next week on our blog!

Shannon Sullivan is the Regional Director of the Upstate New York (UNY) I-Corps Node. She focuses on identifying and supporting innovative researchers who wish to explore the commercialization potential of technologies they’ve developed, and on growing the NSF I-Corps network in the Northeast through strong partnerships with universities, incubators and nonprofit venture development organizations.

Shannon has 10+ years of entrepreneurial experience and was a founding executive at Globaloria, an education technology start up that was sold to Carnegie Learning in 2017. Her career in digital media and technology spans 20 years and includes leadership roles at MTV and Knowledge Adventure.

She holds a BA in Public Relations from the University of Southern California and a MEd in Instructional Technology from the University of Virginia.

Molly Israel

Molly Israel is the Marketing Strategist at CREA. She plans and implements marketing communications plans to promote CREA, its programs, and its various members.

Prior to joining Cornell University, Molly worked at Ithaca College for seven years, most recently as the Executive Director of Marketing. Before joining the ranks within higher education, she got a taste for start-ups as the Director of Marketing and Sales Operations for a fast-growing digital marketing agency in Washington, D.C.

Molly holds a degree in communications from Ithaca College and is constantly seeking better ways to balance mom-life with her two small children. She also serves on the board of the Learning Web, a local nonprofit supporting youth from various backgrounds.

Christy Johnson

Christy Johnson is the Events Coordinator for Cornell’s Center of Regional Economic Advancement. She is responsible for pulling off an ambitious calendar of entrepreneurship and economic development events for all CREA program areas, including the 76West Clean Energy Business Competition.

Christy is an experienced entrepreneur, having run a successful event design & management company in Southern California before recently moving to Ithaca.

Kristin Hopkins

Kristin Hopkins is the Events Manager for the Center for Regional Economic Advancement (CREA). She is responsible for the coordination and implementation of diverse entrepreneurship events at Rev: Ithaca Startup Works and for NYSERDA’s 76West Clean Energy Competition. In addition to events management, Kristin leads sponsorship initiatives and attraction at Rev.

Kristin holds a B.S. in Consumer Science from the University of Alabama. Away from the office, she is an active board member with organizations that support the Lansing School District and enjoys exploring Ithaca’s natural beauty with her family.

Jeremiah Cotman

Jeremiah Cotman’s desire for crafting perception through environment and experience has led him to support entrepreneurs who solve problems and improve the world around them. He works for an ideal future that will not be manifested in our lifetime.

He moved to Ithaca in 2014 from Columbus, Ohio where he received his degree in English Literature Analysis from the Ohio State University.

As Rev Coordinator, Jeremiah oversees operations for Rev Membership and the incubator space, itself. Jeremiah is also the Project Coordinator for eLab, a business accelerator for Cornell student start-ups.

Susan Fleming, PhD

Susan S. Fleming, PhD is a senior lecturer at the Cornell School of Hotel Administration. She is an educator, researcher, businesswoman, and mother with deep experience and expertise in the areas of finance, insurance, business strategy, organizational behavior, and issues of gender diversity.

Fleming began her career on Wall Street, where over a period of twelve years she held various positions in the investment community, including that of analyst at Morgan Stanley & Co.; vice president of Insurance Partners, L.P., a $540 million private equity fund; and partner at Capital Z Financial Services Partners, a $1.85B private equity fund.

After retiring from Wall Street in 2003, Fleming began work as an educator, teaching executives, investment professionals, MBAs, and undergraduates in the areas of corporate finance, insurance, valuation, and gender bias. She also enrolled at Cornell University’s Johnson Graduate School of Management to pursue a PhD in management, where her research focused on better understanding the factors contributing to a dearth of women in leadership positions in U.S. society.

In addition to her work as an educator, researcher, and business consultant, Fleming helped to found a startup company in Ithaca, NY; has previously served on the board of directors of four publicly traded insurance and reinsurance companies, two private companies, and three non-profit organizations; and currently serves on the boards of Virtus Investment Partners, Inc., a publicly traded asset management firm, and Endurance Specialty Holdings, Ltd., a publicly traded global insurance and reinsurance holding company.

Fleming has been published in the Cornell Hospitality Quarterly, Psychology of Women Quarterly, and Cornell Hospitality Reports. She holds a BA in economics and Asian studies (highest distinction) from the University of Virginia, and an MS and PhD in management from Cornell University.

Xanthe Matychak

Xanthe Matychak is a designer and educator working at the intersection of design, sustainability, and technology. She is the Assistant Director of the Hardware Accelerator at Rev Ithaca where she helps hardware inventors turn their ideas into prototypes with viable business models. She is an inventor herself having worked with local companies to acquire funding for their work, including a phase one SBIR.

Xanthe has taught in the Communications and the MBA programs at Ithaca College, the Center for Entrepreneurship at Wells College, and the Innovation Center, Business School, and School of Design at Rochester Institute of Technology. At present she runs the Make Better Stuff Lab in Ithaca College’s Department of Environmental Studies.

Xanthe is a long time member of the maker movement and has shared her work at SxSW Interactive, World Makerfaire, The White House OSTP, MIT Fab Foundation, and the SABIC Innovation Program.

Liane O'Brien

Liane is the Program Manager for CREA. She handles the Finances and is the Research Administrator for the Center. Liane has 15+ year of experience at Cornell in a number of financial and administrative roles, most recently as the Administrative Manager for the KAUST-CU Research Center.

She received her Master’s Degree in Public Administration from American University in Washington, DC as well as her Bachelors in Government and Economics.

Outside of Cornell, she is the Chair for both the Planning Board and the Zoning Board of Appeals for the Town of Veteran, NY.

Brad Treat

Brad is a career entrepreneur with an emphasis on technology-driven companies. Brad was most recently the Founding CEO of Mezmeriz, a high-tech company making interactive projectors and reality capture cameras to embed into mobile phones. Mezmeriz is based on patented MEMS technology developed by company co-founder Shahyaan Desai at Cornell. Previously, he was the Entrepreneur-In-Residence at Cornell University.

Brad was also the co-founder and CEO of SightSpeed, an innovative video and voice communications company. Together with co-founders Aron Rosenberg and Cornell Professor Toby Berger, Brad grew SightSpeed from a university research project into the world’s premier video calling software. SightSpeed was profitably acquired by Logitech for $30M.

Earlier in his career, Brad worked for eight years in the automotive industry in both the US and Spain at Bowles Fluidics and GKN Automotive. He holds a degree in Mechanical Engineering from North Carolina State, and an MBA from the Samuel Curtis Johnson Graduate School of Management at Cornell.

Brad lives in Ithaca, New York. He is faculty at Johnson at Cornell, Cornell Engineering, and Ithaca College teaching practical entrepreneurship, empathetic leadership, and project management. With the loving support of his wife Kristin and sideways looks from his children, he competes in long-distance triathlons in the “Clydesdale” division, has done a few Ironman triathlons, and has finished a handful of marathons without walking.

Brian Bauer

Brian Bauer is the Program Director for clean energy programs with Cornell’s Center for Regional Economic Advancement. Brian runs 76West, NYSERDA’s clean energy business competition, and he is an Entrepreneur-in-Residence for the Southern Tier Startup Alliance, a member organization of incubators across the Southern Tier which is a collaboration between Cornell, Binghamton University, and Corning Enterprises.

Brian is a seasoned international energy industry executive with extensive experience in Oil, Natural Gas, Chemicals, and renewables in the United States, Asia, and Europe. Brian ran several international businesses during a 30-year career in the energy industry and has expertise in operations, strategy, business development, mergers and acquisitions, major project management, corporate governance and organizational change.

Brian has a B.S. In Chemical Engineering from Cornell and an MBA in Operations and Finance from the University of Chicago. In addition to his entrepreneurial work, Brian lectures at Cornell and serves on the Board of the Paleontological Research Institute, which includes the Museum of the Earth and the Cayuga Nature Center, both near Ithaca.

Adriana Condarco-Quesada

Adriana Condarco-Quesada is a Regional Economic Development Specialist at CREA. She guides and implements strategic economic development activities that strengthen and grow the entrepreneurship eco-system. She works closely with the College of Agriculture and Life Sciences (CALS) to support economic development projects that leverage research assets in the plant sciences, controlled environment agriculture, and food sciences.

Prior to joining Cornell University, Adriana worked in international development coordinating strategy development, international donor projects and providing research support to a variety of organizations including the United Nations Indonesia and the Geneva International Centre for Humanitarian Demining.

Adriana completed a dual Master’s program in Public Administration and International Relations at Syracuse University and received her B.A. from the University of Richmond.

Caitlin Schickel

Caitlin Schickel is a Regional Economic Development Specialist for Cornell’s Center for Regional Economic Advancement. Responsible for collecting data on start-up activity in the Southern Tier and coordinating Cornell’s response to START-UP NY, Caitlin also helps out at REV when she can.

Caitlin, an Ithaca native, left to study urban development at Bryn Mawr College, but found herself back home after four years in Philadelphia. While new to the world of start-ups, she is excited to be a part of one of the organizations working to help revitalize Upstate New York.

Ken Rother

Ken Rother is the Director of Rev as well as its Hardware Entrepreneurship program. He is the Managing Director of Cornell’s eLab student accelerator program, teaches entrepreneurship at the Johnson School, instructs and coaches in several technology commercialization programs including NSF I-Corps, and is a Venture Partner at Cayuga Venture Fund.

Ken has held multiple senior business and technical positions for organizations such as Discovery Communications, Reuters, Matrox, and the Toronto Stock Exchange. He has direct startup experience having co-founded a software business in Toronto and joining an early stage online media business in New York, both of these startups concluded with successful exits.

Most recently Ken was the Senior Vice President of Digital Media at Discovery.

Tom Schryver

Tom is the Executive Director of Cornell’s Center for Regional Economic Advancement (CREA) and is a Visiting Lecturer at the Johnson Graduate School of Management. CREA’s programs include Rev: Ithaca Startup Works, the Southern Tier Startup Alliance, and support of Cornell’s regional economic advancement efforts. Tom leads the Upstate NY I-Corps Node, and is the lead instructor for Cornell Engineering’s Commercialization Fellows program. He serves on the teaching team for eLab, Cornell’s student business accelerator, and teaches entrepreneurship and business strategy at Cornell.

He is an experienced entrepreneur having served as a startup founder and senior finance executive of high-growth companies. Previously, he was Director of Finance for the Triad Foundation, where his responsibilities included investing the Foundation’s $250m portfolio to top-quartile returns. His board affiliations include the Cornell Agriculture and Food Technology Park and Tompkins County Area Development, and as board vice-chair of the Business Incubator Association of New York State. Tom co-chairs the Southern Tier Regional Economic Development Council’s Innovation Culture workgroup.

Tom has an AB and MBA from Cornell, where he was a recipient of the MBA program’s Albert J. Fried Fellowship for Leadership and Academic Excellence. He is a Chartered Financial Analyst (CFA).